Comparative Brand Audit

Cisco Systems, Inc. and Huawei Technologies Co. Ltd.

Erika L. Friedmeyer

Executive SummaryComparative Brand Audit: Cisco and Huawei

The following comparative brand audit studies Cisco Systems, Inc. and Huawei Technologies Co.

Ltd.’s respective brands, Cisco and Huawei. The two brands, Cisco from San Francisco, Huawei from

Shenzhen, compete in the US, China and around the world as leading providers of information

technology solutions, including wireless networking, security systems and telecommunication

technologies.

Both brands are known for innovative technology solutions, while Huawei is also known for

mobile devices and Cisco also for services and program certifications. Cisco has established a strong

customer loyalty base, while Huawei is developing this internationally. While Cisco provides a more

service-oriented brand, supported by its brand mantra, “built for the human network,” Huawei offers a

broader range of competitively priced products, while Cisco is only now moving out of a premium pricing

strategy. Cisco boasts a descriptive, meaningful logo, symbolizing the brand’s city of origin and industry

(Golden Gate Bridge and bandwidth bars). Huawei also adapted its logo over time, but lacks descriptors

or meaningfulness. Both firms adapt with changing technology, investing heavily in R&D, with strong

transferability due to the nature of the product, shown by the brands’ presence in over 100 countries.

Both firms employing pull strategies, Huawei has established itself in part because of its

competitive pricing strategy, while employed a premium pricing strategy until the past few years, in

which it is attempting to adopt a competitive pricing strategy. Cisco has maintained its association with

San Francisco and Huawei with China and both establishing brand alliances through joint ventures and

duel-branded products, such as Cisco’s Intel-powered Unified Computing System. Using the free

association method, brand asset valuator and the income approach, the brands are measured and

evaluated. By examining the brand value stages and brand equity management, Cisco is stronger than

Huawei on effectively all counts.

Next examining branding strategies, Huawei and Cisco’s brand architecture and hierarchy are

effectively identical, with the excepting of Huawei’s mobile devices product line. Examining the brands’

extending, sustaining and expanding strategies, both Cisco and Huawei employ similar strategies,

advancing into new technologies as they develop so as not to be left behind by the competition,

expanding into worldwide markets through both acquisitions and geo-expansion. Despite Huawei’s

political problems which have hindered its growth, it has still managed to grow in international markets.

Finally, I offer recommendations that Huawei strive towards transparency and Cisco move out of

self-competition with its subsidiary, Linksys, and embrace a competitive pricing strategy.

Comparative Brand Audit:Cisco Systems, Inc. and Huawei Technologies Co. Ltd.

Cisco Systems, Inc. and Huawei Technologies Co. Ltd., are competitors in the global information

technology market. Because of their frequent interactions across multiple markets, similar age, focus and

goals, they are interesting brands to compare and contrast. This audit will include the following contents:

brand background, brand creation and position, including customer-based brand equity and competitive

frame of reference, brand building, including brand elements and tactical contributions, marketing

strategies and secondary brand associations, brand measurement using the free association method,

brand asset valuator and the income approach, brand value stages, branding strategies, including brand

architecture and hierarchy, extending, sustaining and expanding strategies, and conclusions and

recommendations for future branding success.

Article I. Background InformationCisco, founded in 1984, is just a few years younger than its Chinese competitor, Huawei. As

NASDAQ traded company with 63,870 worldwide employees, Cisco is a ground-breaking and innovative

firm, establishing itself as a worldwide leader in networking with the invention of the multi-protocol

router.1 Cisco’s market share leadership in each of its product markets range from 23.3% in home

network (lagging behind Linksys’ approximate 50%) to 69.6% in switching, leading the competition in six

of nine markets.2 Cisco also witnesses double digit growth across all geographic markets, including 11%

growth in Asia with second quarter revenues exceeding $1.7b in 2012. With over 475 offices in over 165

countries, Cisco entered China in 1994, just ten years after its founding, employing 3,400 people in China

as of 2010, establishing branch offices and a large R&D center in Shanghai. Cisco has also invested in

fostering innovation in the local market, including building 300 Cisco Networking Academies in higher

vocational institutes to build talent.3

Huawei was founded in Shenzhen in 1987, employing nearly twice as many employees as Cisco

worldwide. 4 For its first twelve years, Huawei expanded domestically and then expanded

internationally, establishing R&D facilities, into India in 1999 and then Sweden the following year. In 1 Cisco Systems, Inc. (2012). Cisco overview. Retrieved from http://newsroom.cisco.com/overview2 Cisco Systems, Inc. (2012). Corporate overview: Q2FY12. Retrieved from

http://newsroom.cisco.com/documents/10157/0/Corporate+Overview+-+Q2FY12.pdf3 Cisco Systems, Inc. (2012). Cisco China Backgrounder. Retrieved from

http://www.cisco.com/web/CN/expo/en/pdf/cisco_china_backgrounder.pdf4 Huawei Technologies Co. Ltd. (2012). Milestones. Retrieved from http://www.huawei.com/en/about-

huawei/corporate-info/milestone/index.htm

2001, Huawei established Huawei North America in Dallas, Texas, with international market sales

reaching $552m in 2002. By 2005, international contract orders exceeded domestic sales and, by 2007,

Huawei had established joint ventures with Symantec and Global Marine. As of 2008, Huawei ranks third

in worldwide market share in mobile network equipment and first in mobile broadband devices and in

2010, Huawei was awarded the"2010 Corporate Use of Innovation Award" by The Economist. Although

Huawei’s geographic reach is a fair bit smaller than Cisco’s, its products and solutions serve one third of

the world’s population, reaching just over 100 countries. However, Huawei’s experience in the US has

not been without many rough patches, including altercations with the US legal system and Congress.

With at least four bids to acquire US technology companies and mobile supply contracts, including firms

like 3Leaf, it was rebuffed on national security grounds. Huawei is also under investigation by the State

Department for selling equipment that could be used for monitoring mobile phone users in Iran, which

could be a breach of US sanctions, leading to Huawei’s exclusion from all US government procurement.5

Article II. Brand Creation and Positioning

Both Cisco and Huawei are monolithic brands, although both maintain a few independent or

partner brands in addition to the corporate, family brand. For more information on the brand

relationship and hierarchy, please see Section 6.02.

Section II.01 Customer-Based Brand EquityCisco Huawei

Identity Global networking and security systems leader

Leading global ICT solutions provider based in China6

MeaningAdvanced hardware and software in information

technology and networking

China’s first real global brand, innovative technologies and

devices

Response High-quality, innovative, end-to-end services

Innovative and advanced, ease-of-use

Relationship Loyal customer base Engaged customer baseBoth Cisco and Huawei hold identities as global leaders in information technology, although

Huawei has a clearer geographic identity, for better or worse, giving it meaning as China’s first real global

brand, producing advanced and innovative technology and mobile devices, such as smart-phones and

tablets. Cisco’s meaning is much the same, as a firm producing advanced hardware and software in

5 Potter, B. (2012, March 28). Huawei’s growing us image problem. Retrieved from http://afr.com/p/technology/huawei_growing_us_image_problem_2XddJasU5LkEIs8ZPn7CNP

6 Forbes.com Staff. (Producer). (2012). Will huawei be the first global brand from china?. [Web Video]. Retrieved from http://video.forbes.com/fvn/forbes-asia/rare-look-inside-huawei

information technology, networking and security systems. In response to Cisco, consumers have found

the brand to be one of high-quality, innovative end-to-end and comprehensive services, while Huawei’s

response is that of innovative, advance and ease-of-use regarding consumer mobile devices.

Cisco has established a loyal customer base, committed to the company’s products and identity

over the past 35 years. Huawei, however, has struggled to establish such a clear customer base,

especially overseas. Despite these struggles, it has attracted much attention through its competitive

pricing, quality equipment and diversity of offerings, giving Huawei a good foundation to build a loyal

customer base, something it has consistently striven to achieve.

Section II.02 Competitive Frame of Reference

Target Segment Direct Competitors

POPs PODs Brand Mantra

Cisco

Businesses (small and large),

middle-class families,

professionals, governments and service providers

Huawei, Dell, D-Link Corp.

Ericsson, F5 networks, HP,

Microsoft, Motorola, NETGEAR, Symantec

Supply hardware

and software, security systems

More service-oriented, industry

and market development7,

home networking

Built for the human

network

Huawei

Businesses (primarily large),

young adults/mobile device users, professionals, governments and service providers

Ericsson, Lucent, Cisco

Supply hardware

and software, security systems

Broader product scope, including

telecommunications and mobile devices

None

Cisco and Huawei both target very similar market segments, marketing to businesses (although

Cisco more actively targets small businesses than does Huawei, likely due to America’s abundance of

small businesses), professionals, governments (primarily security systems) and communications service

providers. The only significant difference is when it comes to private individuals: Cisco targets middle-

class families installing wireless networks in their homes for internet and information sharing purposes,

while Huawei targets mobile device users, which are disproportionally young adults, particularly those

with disposable income.

7 Chambers, J. (2008). Interview by P. Burrows [Personal Interview]. Cisco: 'the best company for the world'. Bloomberg Businessweek, New York City, New York. , Retrieved from http://www.businessweek.com/magazine/content/08_47/b4109068391138.htm

Identifying each other as direct competitors, both Cisco and Huawei also directly compete with

Ericsson. Cisco clearly sees direct competition from other US computer technology producers such as

Dell and Microsoft, while Huawei does not seem to feel this pressure. Huawei has also removed

Symantec from direct competition by teaming up with them for a joint venture: Huawei Symantec.

Points of parity between the two brands focus around their products: hardware and software for

security and networking systems. Points of difference, however, include Cisco’s commitment to service

and solution design, providing networking equipment for families in their homes, as well as industry and

market development in foreign markets, seeking to transform countries that lack the skill sets to make

full use of the internet and information technology, manufacturing a market for its products where one

did not previous exist. Huawei, on the other hand, offers a broader product scope which includes

telecommunications and mobile devices, such as smart-phones and tablet PCs, putting Huawei not in

your home, but in your pocket.

While Huawei lacks a brand mantra to express the brand’s core values, Cisco uses the brand

mantra, “Built for the human network,” highlighting the brand’s commitment to networking not only

information, but also individuals.

Article III. Branding Building

Section III.01 Brand Elements and Tactical ContributionsThe memorability of both Cisco and Huawei come from the proliferation of their products,

producing brand recognition, while Cisco also adds to its memorability through its memorable and

meaningful logo and name. Huawei’s likeability is drawn from it dedication to innovation and

advancement as well as the ease-of-use of its devices such as smart-phones and tablets. Cisco, on the

other hand, draws it from its dedication to customers and the ‘human network.’ Huawei’s

meaningfulness is weak, coming only from its Chinese name denoting it as a high-technology firm,

whereas Cisco draws it also from its logo, which resembles bandwidth bars and connectivity, and

customer-oriented brand mantra.

Both Huawei and Cisco move with changing technological needs, developing and

entering into changing fields, such as Huawei developing cloud technology and consumer devices and

Cisco moving into virtualization technology. Both have undergone logo adaptation throughout the

Brand Elements Cisco HuaweiMemorability Memorable logo and name, Proliferation of products, brand

proliferation of products recognition

Likeability‘Human network’ connotes

customer- and individual-based service and products

Innovation and ease-of-use

MeaningfulnessLogo resembles bandwidth bars

(connectivity), innovative and cutting edge, customer-oriented

Chinese name acknowledges high-technology and innovation

Adaptability

Moves with new technology needs: adapting to cloud and virtualization technology; logo has been adjusted over the last 35 years, reaching its

current form in 20068. Logo elements and colors have remained consistent, but has a few different color options,

depending on the background

Moves with new technology needs: developing cloud technology and new

devices; logo has undergone renovation

Protectability Detailed licensing process, maintains hundreds of patents9

Name, logo, coding patent and trademark protected

Transferability Global services, deployed in over 165 countries

Global services, deployed in over 100 countries

lifespan of the brand, although Cisco’s has

been more dramatic than Huawei’s, despite

neither being particularly drastic. Cisco

added its name to the logo and made the

bars more reminiscent of connectivity bars

than simply the Golden Gate Bridge and

updated the font choice. Huawei adapted

the shape of its logo, but the only significant

change was to remove the Chinese

characters and replace them with pinyin,

making the brand more accessible to non-

Chinese-speaking consumers.

Protectability is a huge concern for both

Cisco and Huawei, highlighted by the

copyright infringement lawsuit Cisco brought against Huawei in 2003 (for further discussion, see Section

5.02), both of whom maintain countless patents and trademarks to protect their brand identity and

8 Logo Addiction. (2010, November 20). Retrieved from http://logoaddiction.com/?p=559 Cisco Systems, Inc. (2012). Corporate overview: Q2FY12. Retrieved from

http://newsroom.cisco.com/documents/10157/0/Corporate+Overview+-+Q2FY12.pdf

technology coding. Transferability of the Huawei and Cisco brands is shown by their global presence, the

need for networking and security technology seen across national borders, bound not by language,

culture or geographic needs. Huawei has expanded into over 100 countries while Cisco has entered over

165.

Tactics Cisco Huawei

Name

“思科” is meaningful and descriptive of company’s primary purpose and identity

while still maintaining semblance to English name, ‘Cisco’ comes from ‘San Francisco’

Effectively meaningless in English, “华为” not that

meaningful in Chinese, either

URLs

Very informative corporate website, CSR website, YouTube channel for

marketing/news/company information, social media presence (Twitter, FB), unique

websites for different regions in local language, not just translated

Informative corporate website with unique websites for different regions in local

language, not as easy to navigate or as informative as Cisco’s

Logo

Simple, adaptable to different needs, although not translated across different

geographical markets, descriptive (reminiscent of networking, bandwidth bars

as well as the Golden Gate Bridge in San Francisco)

Simple and adaptable, though not particularly meaningful

Character None NoneSlogan “Built for the human network” NoneJingle None None

Packaging Clean, modern, streamlined, similar to Huawei’s

Clean, modern, streamlined, similar to Cisco’s

Huawei and Cisco’s tactical contributions are also quite similar, with the exception of Huawei’s

overarching lack of meaning in its brand identity. Cisco’s name is layered with meaning, ‘Cisco’ being a

derivation of San Francisco, the city in which the brand was created which carries an identity of

technological innovation. Cisco’s Chinese name, “ 思科 ,” is not only phonetically similar to the brand’s

English name, but is also meaningful and descriptive of the company’s primary purpose, roughly

translating to ‘thinking science.’ Huawei’s name, however, lacks significant meaning in Chinese or

English. Without an English name, ‘Huawei’ acts as nothing more than an indicator that the brand is a

Chinese brand, where “华为” can be translated as ‘magnificent doing’ or ‘China does,’ neither of which

is particularly meaningful or descriptive.

The online presence of both Cisco and Huawei is substantial, maintaining informative corporate

websites, providing information on brand history, financial information, product information and

company news. Both are wise, hosting unique websites for different regions in the local language with

information and news relevant to the brand’s presence in that region, not simply a translated version of

the corporate website. Cisco, in particular, offers a wealth of information on its website, including unique

websites for corporate social responsibility and other such subjects, and a substantial social media

presence on Facebook, Twitter and YouTube, where it broadcasts videos on industry and company news,

marketing and executive interviews.

While Huawei and Cisco both have simple and adaptable logos (Cisco, for example, converts the

logo to all white when placed on a dark background), Cisco’s is substantially more meaningful, as

discussed above, reflecting the brand’s city of origin and primary function: connectivity. Neither Cisco

nor Huawei adapt their logos across different geographic or linguistic markets.

Neither Huawei nor Cisco has a character or jingle, perhaps reflecting their minimal public

marketing and desire to maintain a very professional appearance. Cisco does, however, maintain ‘built

for the human network’ as both a brand mantra and slogan, as discussed in Section 3.02. Both firms’

packaging is remarkably similar, primarily white with clean, modern and streamlined designs discreetly

featuring the brand logo, portraying a modern and stylish identity for the products.

Section III.02 Marketing strategiesBoth Huawei and Cisco use a pull strategy, with minimal active advertising and allowing the

products to sell themselves. Products are sold online or at certified resellers. Recognizing the emerging

role of social networking over traditional advertising, Cisco focuses on creating buzz marketing through

social media, maintaining Facebook, Twitter and YouTube accounts. For both firms, formal advertising is

focused toward corporate customers, not private individuals.

As for pricing strategies, Cisco has been moving more toward a competitive pricing strategy

following the 2008 recession, after which the brand struggled to recover with its premium pricing

strategy. Cisco strives to produce high quality-price ratio products, although given the changing economy

and market, it is considering opting for lower price-point equipment.10 Huawei, on the other hand, has

maintained a competitive pricing strategy, facilitated, in part, by low Chinese labor and R&D costs and

government subsidies.11

10 Investopedia. (2011). Cisco looks to get competitive. Retrieved from http://www.investopedia.com/stock-analysis/2011/Cisco-Looks-To-Get-Competitive-CSCO-NTGR-BRCD-JNPR-HPQ0614.aspx#axzz1tjWwu6Gi

11 Sun, L. (2011, November 23). What do we really know about Huawei?. Retrieved from http://www.telecomstechnews.com/news/2011/nov/23/what-do-we-know-about-huawei/

Section III.03 Secondary BrandingNeither Cisco nor Huawei have chosen to engage in substantial secondary branding, perhaps

attempting to maintain an undiluted brand image. Despite this, both have other brand alliance

associations as well as place associations and sport associations.

Cisco’s current brand alliance is with Intel to create the Cisco Unified Computing System, a server

system powered by the Intel Xeon processor, a data center solution for large enterprises 12. Interestingly,

Huawei has also teamed up with Intel this year to create an “interoperability test lab for the

implementation of long term evolution time-division duplexing (LTE TDD) networks”13 in China. This

alliance benefits Huawei through marketing opportunities for its networking equipment, whereas Intel

will use it to grow its presence in China. Huawei has also formed brand alliances with Symantec and

Global Marine Systems in joint ventures, creating Huawei Symantec and Huawei Marine Networks,

respectively.

Drawing its name from its city of origin, San Francisco, Cisco maintains its association with the

city as well as the United States as a whole. Cisco has also developed a ‘smart city project’ in Songdo,

South Korea14, a city built from scratch from advanced technology encompassing green energy solutions,

technological lifestyle and leisure improvements, transportation solutions, unparalleled lifestyle

experiences and other highly advanced and innovative solutions that could change the face of cities in

the future. Cisco has invested millions of dollars into the project. Huawei has not actively associated

itself with particular geographic locations, but continues its association with China as a Chinese brand.

Huawei associated itself with Atlético de Madrid15 football club to celebrate ten years in Spain,

sponsoring the club for its April 11th, 2012 match against Real Madrid in attempts to connect itself with

the club’s history of achievement and to connect with Huawei consumers in Western Europe. Cisco has

made no such formal associations with people or clubs, but has used the National Basketball Association

(USA)’s experiences with Cisco technology to show the versatility and speed of its video content

network.16

12 Cisco Systems, Inc. (2012). Cisco unified computing system. Retrieved from http://www.cisco.com/web/solutions/data_center/ucs_servers.html?CAMPAIGN=ucs_servers&COUNTRY_SITE=us&POSITION=sl&REFERRING_SITE=Cisco%2Ecom+homepage&CREATIVE=homepage+spotlight

13 Latif, L. (2012, April 30). Intel teams up with Huawei to test LTE TDD in China. The Inquirer, Retrieved from http://www.theinquirer.net/inquirer/news/2171480/intel-teams-hauwei-test-lte-tdd-china

14 Gale International, LLC. (2012). Songdo IBD. Retrieved from http://www.songdo.com/15 Huawei Technologies Co. Ltd. (2012, April 09). Football sponsorship celebrates Huawei’s 10 years in Spain and the

growth of its global consumer brand. Retrieved from http://www.huaweidevice.com/worldwide/newsIndex.do?method=view&newsId=182&directoryId=5024&pageType=news

16 Cisco Systems, Inc. (2012). Built for video management. Retrieved from

Article IV. Brand Measurements

Section IV.01 Brand Value ChainValue Stages Cisco Huawei17

Marketing Investment Moderate Low, but growing (R&D investment)Customer Mindset Strong Struggling (security suspicion)

Market Performance Very strong Weak, but determinedShareholder Value Healthy, strong and growing Private firm

(a) Marketing InvestmentBoth Cisco and Huawei have growing marketing investment, both in their home countries and abroad.

Because of the nature of their products and marketing strategies, product marketing is minimal, but

focuses instead on providing quality products through R&D investment and consistent, helpful services

and communications. At present, Cisco’s combination of strong R&D investment and communication

services somewhat outweigh Huawei’s but both are growing.

(b) Customer Mindset

Cisco, both in the US and abroad, exhibits strong customer awareness, attitudes and attachment.

Despite concerns about reputation damage from Cisco’s lawsuit against Huawei (see Section 5.02),

Cisco’s continued strong performance and growing revenues in China as East Asia show a solid customer

mindset. Huawei, on the other hand, has starkly different performance in China compared to the US.

While US customers have thorough awareness of Huawei, attitudes and attachment are both quite

negative due to security and intellectual property concerns (Section 5.02), dramatically damaging

customer mindset. However, in China, Huawei is thought of quite highly and widely respected.

(c) Market Performance

Both Cisco and Huawei have very strong market performance worldwide, with market shares

exceeding 60 or 70% in some markets, both domestically and abroad. However, Huawei’s market

performance has struggled in the United States and some global markets due to failed acquisitions and

security concerns. During the global economic slowdown, Huawei witnessed decreased revenues, but

these struggles seem to have somewhat recovered along with the global economy. However, despite

these challenges, Huawei is persistent in finding success in the US.18

http://gobuild.cisco.com/view/video_management?CAMPAIGN=hn+built+for&COUNTRY_SITE=us&POSITION=sl&REFERRING_SITE=Cisco%2Ecom+Home+Page+Spotlight&CREATIVE=spotlight+march+nba+video#/view/video_management

17 Lev-Ram, M. (2012,February 23). Huawei is here to stay. CNN Money, Retrieved from http://tech.fortune.cnn.com/2012/02/23/huawei-is-here-to-stay/

18 Lev-Ram, M. (2012,February 23). Huawei is here to stay. CNN Money, Retrieved from

(d) Shareholder Value

Cisco’s shareholder equity is very high, measured at $47,226m and growing, with a healthy P/E ratio

of approximately 15.5. Huawei’s shareholder equity, however, is very difficult to measure as it is a

private, employee-owned company. Based on its performance across markets and particularly in China, it

is safe to assume shareholder value is similar to Cisco’s.

Section IV.02 Brand Equity Management SystemsBoth Cisco and Huawei have a solid view of brand equity, thoroughly detailed in both of their

corporate websites and annual reports, as well as the scope of key brands and products. Both Cisco and

Huawei have brand measurement systems and management programs, Cisco’s are much more

developed or, at least, public. For over ten years, Cisco annually conducts customer satisfaction surveys,

measured on a scale of 1 to 5, rising from 4.06 in 1997 to level out around 4.45 since 2008. Huawei,

conversely, touts proactive consumer sensitivity and adaptation, but does not state its methods of doing

so.19

Regarding treatment of the brand, Huawei, particularly, has run into some difficulties, which

have come to define its experience in the US. As previously discussed, Huawei has struggled to separate

itself from its founder’s ties to the Chinese military and People’s Liberation Army, which has elicited

national security concerns. Sale of equipment which could be used for monitoring mobile phone users in

Iran is currently under investigation by the State Department as a breach of US sanctions, potentially

leading to Huawei’s exclusion from all US government procurement.20 They have also experienced issues

in India with Taliban allegations21 and security concerns in Australia.22 Despite no evidence being

uncovered, Huawei has suffered significant, potentially irreparable damage to its image.

Huawei has even suffered poor brand treatment at hand of Cisco itself. In February of 2003,

Cisco sued Huawei for patent infringement and illegally copying router and switch source coding. A year

and a half later, Cisco dropped the suit after it became clear the “problem stemmed from some rogue

developers at Huawei, not a company-wide mandate to rip off Cisco's intellectual property” and the

http://tech.fortune.cnn.com/2012/02/23/huawei-is-here-to-stay/19 Huawei Technologies Co. Ltd. (2012). Quality &Customer Satisfaction. Retrieved from

http://www.huawei.com/us/about-huawei/corporate-info/quality-policy/index.htm20 Potter, B. (2012, March 28). Huawei’s growing us image problem. Retrieved from

http://afr.com/p/technology/huawei_growing_us_image_problem_2XddJasU5LkEIs8ZPn7CNP21 Satyamurty, K. (2001, December 11). Chinese firm's dealings: police kept in the dark about probe The Hindu,

Retrieved from http://www.hindu.com/2001/12/12/stories/2001121200721100.htm22 Winning, D. (2012, March 26). Canberra talks integrity after reportedly banning Huawei from NBN. Wall Street

Journal, Retrieved from http://blogs.wsj.com/dealjournalaustralia/2012/03/26/canberra-talks-integrity-after-reportedly-banning-huawei-from-nbn/

offending coding was removed.23 Interestingly, both firms saw this as a victory, Cisco viewing it as a

“victory for the protection of intellectual property rights” and Huawei pleased that the case was

dismissed “with prejudice,” keeping Cisco from bringing another lawsuit with the same or similar claims

against Huawei. Unfortunately, both firms suffered damage to their images in the global market, as Cisco

was portrayed as “a bullying multi-national corporation trying to crush a local competitor” in the Chinese

media.24 Cisco’s Chinese executives expressed regret, believing the benefits achieved through the lawsuit

was outweighed by the damage to Cisco’s reputation in China.

Brand Equity Charter Cisco HuaweiFirm view of brand equity ✔ ✔

Scope of key brands ✔ ✔Actual & desired equity for the brand ✔ ✔

Brand measurement system ✔25 ✔Brand management programs ✔ ✔Poor treatment of the brand ✔ ✔

Brand Equity Report

CiscoAnnual customer satisfaction survey which is reported annually, tied to bonus plan,

Cisco recognized as #13 Brand in the 2011 Interbrand Best Global Brand study (third-party equity)

Huawei ???

Brand Equity Responsibility

Cisco Blair Christie, Senior VP and CMO, Government Affairs26 (also President for APJC, Exec VP of Worldwide Operations)

Huawei ???Cisco maintains an annual brand equity report which includes the findings from the annual

customer satisfaction survey and third-party equity assessments and studies, such as the 2011

Interbrand Best Global Brand study, which named Cisco the #13 Brand. These findings are reported to

Blair Christie, the Senior Vice President and Chief Marketing Officer, Government Affairs as well as the

23 Harvey,P. (2004, July 28). Cisco drops Huawei Suit. Light Reading, Retrieved from http://www.lightreading.com/document.asp?doc_id=56939

24 Wikileaks. (2010, February 19). Cablegate: 2010 Shanghai Ipr roundtable –Candid commentary. Retrieved from http://www.scoop.co.nz/stories/WL1002/S01773.htm

25 Cisco Systems, Inc. (2012). Corporate overview: Q2FY12. Retrieved from http://newsroom.cisco.com/documents/10157/0/Corporate+Overview+-+Q2FY12.pdf

26 Cisco Systems, Inc. (2012). Blair Christie. Retrieved from http://newsroom.cisco.com/blair-christie?articleId=33269

President for the Asia Pacific-Japan-China region and Executive Vice President of Worldwide Operations.

The findings of this report are tied in to employees’ bonus plans, building personal investment in brand

equity. It is not apparent that Huawei prepares a formal brand equity report or maintains an advisory

position for brand equity responsibility.

Section IV.03 Measurement techniquesIn order to measure Huawei and Cisco’s brand equity, I have chosen to employ the Free

Association technique to identify consumers’ core images and associations with Cisco and Huawei. Cisco

itself uses this approach in customer research and brand equity measurement. To provide a big-picture

view for future development, I have also chosen to use the Brand Asset Valuator, plotting both US and

China market positions. Because Huawei is an entirely employee-owned private company, the market

approach, which uses market capitalization to find brand value, is not very useful. Instead, I’ve chosen to

examine the brand value by

using the income approach,

which views brand equity as the

discounted future cash flow

from the brand’s future earnings

stream.

(a) Free Association27 Commonly associated

with Cisco are words like

‘market transitions’ and

‘innovation,’ identifying

Cisco’s commitment to

staying more than just up to

date, but ahead of market

changes in order to provide

the best products and services available. Other associations include experiential associations like

‘open communication’ and ‘giving back’, symbolic and brand personality associations such as ‘fun,’

‘empowerment’ and ‘inclusion’.

27 Cisco Systems, Inc. (2012). Corporate overview: Q2FY12. Retrieved from http://newsroom.cisco.com/documents/10157/0/Corporate+Overview+-+Q2FY12.pdf

Associated with

Huawei are similar brand

personality characteristics,

like ‘innovative’ and

‘improvement’. However,

commonly associated with

Huawei are also

characteristics with

negative connotations,

such as ‘national security

risk’ and ‘poor corporate

responsibility,’ reflecting

Huawei’s struggle to build

brand equity in the US

market due to political

and intellectual property misadventures. Still, Huawei elicits product-related associations such as

‘routers,’ ‘mobile phones, devices’ and ‘networking/infrastructure.’

(b) Brand Asset Valuator (BAV)

Displayed to the right is the

Brand Asset Valuator, showing the

brand value of Cisco and Huawei

both domestically and abroad.

Cisco in the US is placed as a

power leader, with high brand

strength and stature. Cisco in

China ( 思 科 ), however, is

transitioning from unrealized

potential into a leader position,

growing brand stature and

strength. Huawei in China (华为技

Routers

National Security

Risk

Innovative

Mobile Phones, Devices

ChineseNetworking/ Infrastructure

Poor corporate

responsibility

R&D

Improvement

术 ) is moving into a declining leader position, despite having strong brand stature in China due to its

increased brand salience and loyalty within China. However, Huawei in America is an eroded brand

whose brand stature includes unbalanced brand knowledge and esteem, due to its political and legal

troubles. Its strength has also suffered due to its struggles to acquire local brands for brand building.

(c) Income Approach

To examine the brand value both quantitatively and also as function of future, expected income, I

have used the income approach below, finding Cisco’s brand value28 at $17.5b and Huawei’s29 at $4.98b.

BrandValueCisco=∑t=1

n6,490m

(1+0.25 )5=17.5b

BrandValueHuawei=∑t=1

n1,850m

(1+0.25 )5=4.98b

These income values reflect earnings from all markets worldwide, exposing Cisco’s international brand value to be over 3.5 times greater than Huawei’s. Also, knowing that Huawei’s international earnings have exceeded domestic earnings since 2005, this also reflects that Huawei is losing ground in its domestic market, perhaps reflecting China’s lower demand for high-technology products.

Article V. Branding Strategies

Section V.01 Brand Architecture

Networks Collaboration Data Center and Virtualization

Small Business

Home Services

Cisco

RoutersSwitchesWirelessSecuritySoftwareInterfaces

WebExTelePresence

Video and Content Delivery

Voice and Unified

Communications

ServersStorage

NetworkingData Center

SwitchesNX-OS Software

RoutersSwitches

Security and SurveillanceVoice and

ConferencingWirelessNetwork Storage

ūmi telepresence

Home Networking

Cable TV Set-Tops

TechnicalAdvancedDeveloper

28 Cisco 2011 Annual Report, July 30,2011 income values29 Huawei 2011 Annual Report, 2011 values, converted into US dollars using December 31, 2011 closing rates

Networks Enery & Infrastructure

Data Center & StorageModifier

Individual Brands

Family Brand

Corporate Brand

NetworksData Center

& Virtualization

Home

Radio Acces

s

Fixed Acces

s

Core Networ

k

Transport

Network

Data Communicatio

n

Energy & Infrastructur

e

Application &

Software

Storage &

Network

Security

OSS Devices

Huawei

Single BTS

Multi-mode BSC

FTTxDSLAMMulti-Service AccessuniSite

Single CORE

Single EPCSingle SDBSmartCare

WDM/OTNHybrid MSTPMSTP

MicrowaveMarine

Network

NE RoutersAR Routers

Metro Services Platform

Ethernet SwitchesNetwork Security

Multi-Service Control Gateway

PTNATN

Carrier Class Power

Hybrid PowerMini-shelter

EasySiteAntenna and RF

ODN

BSSConsumerEnterprise

CloudStorStorage

Area NetworkNetwork Attached Storage

Application Storage

SNS Switch

FBB O&M

(product series)

MBB O&M

(product series)

Mobile PhoneMobile

Broadband

Home Devices

Above can be seen the brand architecture of both Cisco and Huawei, showing the product lines

across the top and the categories within. Due to the nature of the product, it is difficult to compare the

product lines and categories of Huawei and Cisco side-by-side, in part because Huawei primarily

establishes product lines according to product characteristic and function, while Cisco creates product

lines according to the market segment it is designed to serve (eg: Small Business, Home). When looking

at these two brands, it can be seen easily that Huawei offers a more diverse and extensive product line

offering while Cisco offers more service-based products.

Section V.02 Brand Hierarchy

The chart below shows the brand hierarchies of Cisco and Huawei respectively, including

selections from their individual brands (Huawei also includes Huawei-Intel and Huawei Marine Systems

joint venture, Cisco including its joint venture with EMC) and modifiers (product lines and categories).

Both companies sell very few products under brands other than the family brand.

Section V.03 Extending Strategies

Cisco’s extending strategies center primarily on constantly introducing new products and

improvements on these products. In addition to these category extensions, Cisco also engages in

sporadic product line extensions when new technologies develop, such as the current product line

extensions into virtualization technology.

Huawei has engaged more substantial extending strategies, introducing not only category and

product line extensions into cloud and mobile device technology, but also brand extensions through its

joint ventures with Symantec and Global Marine Systems, creating Huawei Symantec and Huawei-

Marine Networks brands. Huawei current plans product line extensions into e-education and e-

healthcare.

Section V.04 Sustaining Strategies

(a) ReinforcementBoth Cisco and Huawei’s reinforcement strategies focus around providing consistent and reliable

products that are perpetually fine-tuned to provide the best possible equipment to consumers. Cisco

also reinforces the brand through its customer satisfaction and brand equity monitoring, striving to

provide top-notch customer service.

(b) Revitalization

By updating their logos and packaging, Cisco and Huawei revitalize their brands simply and effectively,

primarily relying on new technologies and renovated products to continuously revitalize the brand.

(c) Adjustment

Cisco, particularly, is constantly assessing customer needs and adjusting products offerings to reflect

changing market demands. Cisco has entered into home networking as part of its migration strategy,

following the market demands, while Huawei has chosen to migrate into the handheld mobile devices

market. As years pass, both firms retire products or services as they are no longer relevant to current

technological needs. Cisco, who also offers certifications for professionals in IT fields, consistently retires

outdated certifications and training programs.

Section V.05 Expanding Strategies

Both Cisco and Huawei practice standardization strategies, adjusting the software and packaging

language accordingly. Due to the nature of the product, not much customization is necessary as the

demands for equipment, software and services are effectively identical across geographical markets.

Cisco plans to expand into the new markets of IP traffic and handheld devices, stating a need for more

robust architectures, equipment and services in these markets. It has formed alliances through

partnerships across industries, including Intel, and for go-to-market investment strategies. Cisco has

worldwide geo-extension, including countless acquisitions for market acceleration, expansion and new

market entry. In March of 2012, Cisco announced its intent to make its most recent acquisition, NDS

Group Ltd., a leading video software and content security solutions provider from London. This

acquisition will broaden opportunities in the service provider market, expanding reach into emerging

markets, such as China, India, where NDS has establish customer footprint.30

Huawei, however, has had no such success in its expanding strategies, facing resistance in many

of its geographic expansions in last decade. However, it has successful geo-expansion into over 100

countries and greenfield R&D centers around the world, including four in the United States. Despite its

multiple failed and blocked attempts to acquire US brands, it has successful formed alliances and joint

ventures, resulting in the multiple brand extensions discussed above.

Article VI. Conclusions and Recommendations

Section VI.01 SWOT AnalysisBoth Cisco and Huawei’s strengths lie in their investments in R&D and patent ownership,

growing their innovative and advanced technological products which have earned each of them their

global recognition. Their weaknesses, however, are fairly different. Cisco’s weaknesses lie in its

attachment to its premium pricing strategy, which has alienated some consumers, particularly during the

recent global recession and recovery. In China, Cisco is also weakened by its appearance as a global

juggernaut bullying smaller brands, particularly following its lawsuit against Huawei in 2003. Huawei’s

weaknesses, however, are in its lack of transparency and image of secrecy, worrying companies and

governments who might otherwise trust the brand to protect valuable security information. Huawei has

failed to understand the US legal system and market demands, as well as its image as a risk to national

security,31 which have resulted in its failed acquisitions.

Opportunities for both brands involved continued innovation and technology advances. The

continued growth and expansion of technology usage and literacy offer both brands unlimited growth

opportunities, so long as they stay ahead of the competition through continued improvement. Both 30 Cisco Systems, Inc. (2012, March 15). Cisco announces intent to acquire NDS. Retrieved from

http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=71200231 Goldberg, A. & Galper, J. (2011, March 03). Where Huawei went wrong in America. Wall Street Journal, Retrieved

from http://online.wsj.com/article/SB10001424052748703559604576175692598333556.html

Cisco and Huawei face threats from competition as research and development take time and, if the

competition provides solutions first, the brand will struggle to compete. Development in this industry is

simply risky as the business relies upon continued growth of the internet and internet-based systems.

Merger and acquisitions have no assurance and are inherently risky, particularly in this industry due to

the advanced, high-technology companies with particularly high overhead and sunk costs. Global politics

and exchange rates also pose a threat to international trade as a whole. Huawei, however, also faces

threats from the US government, with the House Intelligence Committee launching informal inquiries in

late 2010 as the campaign against Huawei’s involvement in a $5 billion bid to supply network equipment

to Sprint Nextel was coming to a head, particularly related to Huawei’s ‘reported relationship’ with

People’s Liberation Army. While investigations turned up no evidence for concern, this is not an isolated

incident and Huawei needs to address the threat of political distrust which extends into the nation at

large.

Section VI.02 Overall Brand CompetitivenessHuawei and Cisco are both extremely competitive overall, as demonstrated by their outstanding

market shares (both exceeding 16%, placing them second and first, respectively) in the global market and

multi-billion dollar revenues. Both face trials and have plenty of room for improvement, which I discuss

below.

Section VI.03 Issues to be Resolved & Strategy RecommendationsHuawei’s primary concern is its failure to understand and comply with local legal systems as it

enters new geographic areas. Because of the sensitive nature of security and information systems, it is

imperative that Huawei recognizes how its actions in one market affect demand in other markets.

Huawei’s experience with its sales in Iran impacting its product and acquisition reception in the US

require them to realize the importance of convincing both the US consumers and government that

Huawei’s interests are not inconsistent with US security, which may include establishing new leadership

without connections to the People’s Liberation Army. Huawei must actively and intensively work to

dispel and correct ‘misinformation and misperceptions’ of intellectual property, security and espionage

concerns.

Huawei also needs to consider developing a more formal and consistent measurement and

report of brand equity to help the brand adapt to meet the needs of its customers. Beyond this, it also

needs to become more transparent in its R&D and dealings, as its reputation abroad for being secretive

will cost it dearly as this is an industry which handles very sensitive and valuable information that

consumers are not willing to entrust to companies they do not trust.

As for Cisco, its acquisition and endorsed brand, Linksys, competes with the family brand’s few

home products and is also not commonly identified with its parent company, despite its endorsed brand

relationship. As Cisco’s home products have not received the consumer recognition that Linksys has,

Cisco should consider transitioning all its home product line to Linksys and invest in marketing Linksys as

a part of Cisco. This could help decrease internal competition and increase Cisco’s brand stature in the

home product market.

Huawei needs to take into consideration its behavior and struggles in foreign markets and their

impact on other markets. Issues in the US have drawn suspicion of Huawei in other markets, such as

Australia. In order to control and minimize losses, Huawei should do one of two things: focus on

repairing damage done in overseas markets, making reparations as the community, culture, government

and consumers see fit in order to prove itself as a reliable and secure brand before expanding into other

countries and other markets, or cut its losses in these countries and exit the market, investing in other

developing markets in attempts to contain and move past the struggles in the West.

Huawei also needs to bolster its domestic market by building up the industry as a whole.

Domestic demand needs to grow through technological development in order for Huawei to continue

building as a global brand. Huawei should consider domestic investments similar to Cisco’s Songdo,

South Korea project (Section 4.03) and may also benefit from Cisco’s investment in Networking

Academies to build up the domestic technology industry.

Cisco needs to recognize the nature of its competition and embrace a competitive pricing

strategy, producing a competitively priced product line, if nothing else. The longer Cisco maintains a

premium pricing strategy, the more customers they will lose to foreign competition, like Huawei, with

lower costs of production, in both domestic and international markets.